Chief Executive Rick Wallace told analysts on a conference call on Thursday he expects new demand from memory chipmakers and contract manufacturers in the September quarter to only partly offset less business from makers of microprocessors and other logic chips.

A slowing PC industry and worries about the economy have hurt demand for chip manufacturing gear, although booming sales of smartphones and tablets have been a bright spot.

Chipmakers use KLA-Tencor’s products to measure the effectiveness of complicated manufacturing processes and reduce defects.

Top chipmaker Intel Corp (INTC.O), hit by slower PC sales as consumers turn to tablets, said this month it was cutting its 2013 capital spending plan for the second time in three months.

“We expect order levels to strengthen modestly in the second half of 2013 with sustained strong demand from foundries and the growth in memory offsetting a weaker outlook for logic,” Wallace said on the conference call.

Memory chipmakers face new technology challenges that analysts say could lead them to invest more in cutting-edge manufacturing equipment.

Needham analyst Edwin Mok said KLA-Tencor would likely benefit less than some competitors from a potential rise in spending by memory chipmakers.

“The biggest investor concern right now is that if memory is a big driver for spending in 2014, KLA-Tencor won’t see as much leverage as someone like Lam Research (LRCX.O). And there’s also concern about share loss to competitors,” he said.

Contract manufacturers, or foundries, make many of the key chips in smartphones, although Wall Street is increasingly concerned that booming sales of those devices could soon begin to lose steam as the market becomes saturated.

KLA-Tencor said fiscal fourth-quarter revenue fell to $720 million from $892 million in the same quarter last year.

For the current quarter, KLA-Tencor expects revenue to fall to a range of $620 million to $680 million, Wallace said.

Fourth-quarter new orders were $713 million. The company estimated orders of $600 million to $750 million in the current quarter.

Net income for the fourth quarter declined to $135 million, or 80 cents a share, from $248 million, or $1.46 a share, in the fourth quarter of fiscal 2012.

Non-GAAP EPS was 82 cents in the fourth quarter.

Wallace said he expects current-quarter non-GAAP earnings of 53 to 73 cents a share. Analysts had expected 86 cents.

Shares of KLA-Tencor rose 3.83 percent in extended trade after closing up 0.57 percent at $59.79.